Economy recovered from crisis with speed

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Economy recovered from crisis with speed

The Korean economy, Asia’s fourth-largest, was the fastest among the world’s major economies to recover from the 2008 global financial crisis that sparked by the collapse of investment bank Lehman Brothers, data showed yesterday.

Seoul’s stock market recorded the second-best performance worldwide in the four years after Lehman Brothers filed for bankruptcy protection on Sept. 15, 2008, while the Korean won strengthened against the U.S. dollar and other major currencies.

The country’s credit default swap (CDS) premium, which measures the chances of a sovereign default, also fell below those of China and Japan, according to industry data.

In the post-crisis years, Korean stock prices posted the second highest rise of the world’s 10 biggest economies in terms of gross domestic product.

The benchmark Kospi, which slumped to a low of 938.75 on Oct. 24, 2008, more than doubled since to finish at 2,007.58 last Friday.

Russian shares increased 2.89-fold on the back of a rise in oil prices, but gains in other global bourses fell short of Korea’s.

The S&P 500 gained 1.67-fold during the period, while Chinese and Japanese stocks gained 1.15-fold and 1.2-fold, respectively.

The Korean won also improved significantly against the greenback. The Canadian dollar strengthened 24.4 percent, while the Korean won closely followed with 21.4 percent.

The Japanese yen, considered a safe-haven asset, strengthened 17.6 percent, while the euro weakened 3.24 percent, according to the data.

Meanwhile, the CDS premium on Korea’s five-year currency stabilization bonds reached 69 basis points on Friday, down from 316 basis points on Dec. 31, 2008.

The spread on CDS reflects the cost of hedging credit risks on sovereign or corporate debt.

A steep rise indicates a deterioration in the credit of government bonds and higher costs for bond issuances. A basis point is 0.01 percentage point.

On Friday, Korea’s CDS premium topped China’s 74 basis points and Japan’s 70 basis points, according to the data.

The spread on foreign exchange equalization bonds due in 2019 also fell to 63 basis points on Friday, down from 428 basis points on April 9, 2009, mirroring an improvement in sentiment.


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